moneycontrol.com
The National Housing Bank (NHB), the regulator for housing finance companies in India is ramping up its efforts on affordable housing, typically priced below Rs 25 lakh. It has almost finalised the scheme for Urban Housing Fund (UHF) of Rs 2,000 crore, recently announced in the Union Budget 2013. NHB has also set a refinancing target of Rs 21,000 crore in 2013-14 (July-June), a rise of nearly 25% year-on-year.
"We have already prepared the scheme for Urban Housing Fund (UHF)," V Verma, chairman and managing director, NHB told moneycontrol.com in an exclusive interaction here in Mumbai.
"We are in the process of consulting with ministries of housing and finance as well. It should be finalized shortly. We are considering some kind of ceiling for the loan amount. It is likely to be in the range of Rs 15 - 20 lakh. There may be income ceiling as well. It would be for people whose income will not cross certain benchmark per year," he said sharing parts of the scheme.
UHF was set up in line with the Rural Infrastructure Development Fund (RIDF) wherein banks are mandated to keep money for their shortfall in meeting priority sector lending (PSL) at 40% of total loans. NHB refinances housing finance companies to aid low income borrowers, who in turn, get loans at a concessional rate.
Below is an edited excerpt of the interview:
Q. What is the current status of Urban Housing Fund (UHF)?
A. We have already prepared the scheme for UHF. We are in the process of consulting with ministries of housing and finance as well. It should be finalized shortly. We are considering some kind of ceiling for the loan amount. It is likely to be in the range of Rs 15 20 lakh. Affordability is important for certain segment of the people. There may be income ceiling as well. It would be for people whose income will not cross certain benchmark per year.
Through this UHF, we intend to provide long term housing loans. The tenure could go up to 20 years. However, it also depends for what tenure we get funds from banks. Initially, we are getting Rs 2,000 crore to be financed by banking industry under the priority sector allocation.
We also have a fund christened as Rural Housing Fund wherein limit has been increased from Rs 4000 crore to 6000 crore. RHF is another source of refinance.
Q. Can affordable housing be a reality in India? Globally it is not that much successful model barring a few countries like South Korea.
A. On the financing side, we are trying every possible measure to make it happen fully. From construction side, a lot of things are happening in different states. It normally does not get captured in our general finance trends. Some states have their own policies relating to subsidiaries, concessional rates and so on.
Some states are implementing their own housing projects while some schemes in partnerships with the central government are also going on. The latter needs to be scaled up and it is limited so far.Low income states including Madhya Pradesh, Bihar, West Bengal, and Odisha are considered laggard here.
Poverty, land governance are issues for those states. However, there are other priorities like social sector. Housing can go hand on hand despite all interventions. State government housing policy should be based on market realities. It should not be something that when a state reaches a level only after it will start focusing on affordable housing scheme.
We are working with some state governments where we are assisting them in framing housing policies. So far, we have worked with Karnataka, Tamil Nadu, Punjab, Kerela and Rajasthan. A few more state will take up soon.
Q. At a time when banks are expanding home loan portfolios in full swing, how do you justify the role of housing finance companies?
A. It (housing) is a market which is constantly growing. Banks and HFCs together are accounting for just above 30% of the total formal sector housing requirements. So, there is a huge gap. Neither the bank nor the housing finance company can meet that. We feel that all institutions (lenders) are required to be there with continuous expansion and innovations.
Informal sector borrowers are growing in numbers and contributing to the economy as well. However, few lenders are comfortable in lending informal sector borrowers. They are people who constitute the large section of the market and expanding. They have the ability to service the loan. Now, if lenders have skills to appraise them. It is what I call innovation.
Q. Are you allowing external commercial borrowings (ECBs)?
For developers, guidelines have been framed. We have had some application from a few builders, which we are looking at. We have an internal committee which is examining those. Based on their views, we will respond accordingly. On can expect some modifications in ECB norms.
Q. What are your refinance targets?
A. We should be closing this year at about Rs 17,000 crore as against Rs 14,100 crore last year. In between July 2013 to June 2014, we should be targeting another 20-25% growth at Rs 21,000 crore.
Q. In the proposed regulatory bill for real estate what role NHB will play?
A. Role of the NHB is very limited. However, it will be associated. The current bill provides for an oversight committee at the national level, which has representation from NHB and all the relevant institutions. The regulatory bill as and when it sees the light of the day, it is going to be very powerful tool. It will make the area of real estate industry and construction industry very transparent.
Q. What is new for the RESIDEX (an NHB indicator for tracking prices of residential properties)?
A. From the quarter January to March, we will be now announcing for 26 cities as against 18 cities earlier. We plan to have monthly RESIDEX in July-September quarter. For that, we have already started consulting various centres. For example, we will consult with banks and housing finance companies on April 6 in Chennai. They provide us data. We are endeavoring to announce a monthly RESIDEX from July onwards.
saikat.das@network18online.com
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